Gilpin, Global Political Economy (2001)
Gilpin, Global Political Economy. (2001) Chapters 1, 2, 8, 9, 10 Context: Economist famous for his prior work on post cold war economics. Considers this book complementary and more focused on theory and international political economy. Attempts to overcome previous book’s weakness in underplaying domestic dimension. Written pre-2003 invasion of Iraq, but after China joined WTO (99) - China’s GDP has since doubled. Book takes an acknowledged realist approach with a state level of analysis (p4). He is an advocate for free trade. Thesis: Economy can’t be examined in isolation, but along with political analysis in “Political Economy.” National policies and domestic economies remain the most critical determinants of economic affairs (the state remains ultimate arbitrator). Globalization, economic regionalism, multinational corporations (MNC), foreign direct investment (FDI) are growing influences. Note MNC & FDI chapters were not assigned. Terms: Economics – a universal science of decision making under conditions of constraint and scarcity Economic regionalism – individual states in a geographic region collectively promoting vital Nat’l interest Argument: Gilpin pits alternative approaches to int’l economy against each other throughout the book. 1. The behavior of a nation’s trading partner doesn’t affect our deficit/surplus –it’s domestically defined (203) 2. Trade relations are a prisoner’s dilemma & require unambiguous rules to forestall conflict (219) : 2.1. These rules were provided by GATT, now WTO – lower barriers, provide reciprocity 3. Purpose of int’l economy requires agreement and governance – there is none in an anarchic state system : 3.1. Monetary system (234) – facilitate transactions in “real” economy (trade, manufacturing) : 3.2. Financial system (234) – provide investment capital required for economic activities : 3.3. Purpose was to strengthen anti-soviet economies and enforce political unity of US and allies : 3.4. Purpose is now debated and undefined (think large group dynamics from Olson reading) Implications for Strategy (How does political economy effect security?) 1. Build interdependencies to reduce chance of war (too costly – may have opposite effect due to dependency) : 1.1. Think China - can we afford to go to war with primary trading partner & buyer of US debt? 2. Politically sensitive matters are introduced into economics & spark conflict: labor standards, human rights 3. Four themes (Pg22/3): : 3.1. Int’l policy & security sets framework – economy operates within it : 3.2. Domestic and int’l economies generate wealth, which is distributed unevenly : 3.3. Int’l imbalance causes states to redefine state interests and foreign policies : 3.4. Changes may undermine stability of framework and/or lead to international conflict Economic sanctions lie somewhere between war and appeasement in terms of a continuum of "toughness"-and hence are open to attack from both "hardliners" and "soft liners-he notes prescriptively that "techniques that enable policy makers to demonstrate firmness while reassuring others of their sense of proportion and restraint can be highly useful, especially to nuclear powers" (p. 105). In addition, in citing the desirability of using economic statecraft as a means of registering approval or disapproval, Baldwin notes that "economic techniques usually cost more than propaganda or diplomacy and thus tend to have more inherent credibility. Military techniques, of course, usually entail higher costs and even more credibility, but their costs may be too high" (p. 107) Baldwin concludes that "compared to other techniques of statecraft, economic measures are likely to exert more pressure than either diplomacy or propaganda and are less likely to evoke a violent response than military instruments." Hence, "they are not merely inferior substitutes for force but first-best policy alternatives" (p. 110). Understanding political economy is critical because the United States typically uses either military forces or economic statecraft to achieve foreign policy objectives.